Millions of students and families will now pay less to borrow money from the federal government to finance college in the coming academic year.
Interest rates on federal student loans are set to drop by more than one-third of a percentage point following the U.S. Treasury’s sale on Wednesday of 10-year notes. Rates are reset each year based on the yield of the note set by that auction.
The interest rate on new loans for undergraduate students will drop to 4.29 percent from the current 4.66 percent. The cost of new direct loans for graduate students will fall to 5.84 percent from 6.21 percent.
Rates on PLUS loans for graduate students or parents paying their children’s college costs will also tick down to 6.84 percent from 7.21 percent.
The new interest rates for the 2015-16 academic year take effect on July 1. The changes do not affect borrowers with older loans.
President Obama on Friday showered attention on community colleges and his plan for free community college. As graduation speaker at Lake Area Technical Institute, in South Dakota, he said he picked the institution to highlight its success in graduation rates and job placement rates, and related those statistics to the care of the faculty, quoting students about the support and guidance they receive. And President Obama plugged his proposal for free community college, arguing that Congress could easily endorse the concept and pay for it.
"If folks in Congress decided to make this a priority, we could do the next best thing and make community college free for an entire generation of young Americans, as long as they’re willing to work, keep their grades up, be responsible, graduate on time," President Obama said. "And we could pay for it by closing just one loophole for millionaires and billionaires. Just one. Just one tax loophole enjoyed almost entirely by very few at the top, we could offer a quality education to millions of middle-class Americans. It’s in everybody’s interest." The full text of the president's remarks may be found here.
Also on Friday, the White House released an email from the actor Tom Hanks, a community college graduate and already a supporter of the president's plan, describing how Chabot College changed his life, crediting specific faculty members and endorsing the free community college plan.
"I produced the HBO miniseries John Adams with an outline format I learned from a pipe-smoking historian, James Coovelis, whose lectures were riveting," wrote Hanks. "Mary Lou Fitzgerald's Studies in Shakespeare taught me how the five-act structures of Richard III, The Tempest and Othello focused their themes. In Herb Kennedy's Drama in Performance, I read plays like The Hot L Baltimore and Desire Under the Elms, then saw their productions. I got to see the plays he taught, through student rush tickets at the American Conservatory Theater in San Francisco and the Berkeley Repertory Theater. Those plays filled my head with expanded dreams…. Here's my bottom line, and it's simple: More kids (and adults, for that matter) should have this chance."
Two gifts of $15 million each were announced last week to TheDream.US Foundation, which supports financial aid for students who lack the legal documentation to live permanently in the United States, The New York Daily News reported. The $30 million is believed to be the largest infusion of funds ever to help such students. The foundation works closely with the City University of New York, whose students have received half of the scholarships from the foundation. Financial aid is particularly important to undocumented students, as they are ineligible for federal aid. The donors are Donald Graham, former CEO of The Washington Post, and Bill Ackman, a hedge fund manager.
For weeks, there has been speculation that Hillary Clinton was preparing a plan to promote debt-free college. That speculation really took off Wednesday when Robby Mook, Clinton's campaign manager, referenced the idea in an interview with CNBC. Asked about how Clinton would appeal to younger voters, Mook said, “What voters are looking for in this election is someone who’s going to be a champion for everyday people. For young people that’s debt-free college, that’s finding that job after you graduate.” Representatives of Clinton's campaign declined to say to Politico that Mook's statement represented an official campaign endorsement of the policy, but said that Clinton would be releasing detailed proposals on paying for college.
Inside Higher Ed is pleased to release today "Dealing With Debt,"our latest print-on-demand compilation of articles. The booklet is free and you may download a copy here. And you may sign up here for a free webinar on Wednesday, May 20, at 2 p.m. Eastern about the themes of the booklet.
For three years, Cheyney University failed to meet its requirements to track federal student aid awarded to its students, The Pittsburgh Post-Gazette reported. Colleges and universities are required to do such tracking to make sure students are eligible, and Cheyney could have to repay funds for which it can't document student eligibility. Just under $50 million in aid awards was not tracked, and that process has now started. It is unclear how much the university could owe. Cheyney, a historically black college in Pennsylvania, is already facing significant financial problems.